BILL NUMBER: AB 330	CHAPTERED  09/24/00

	CHAPTER   617
	FILED WITH SECRETARY OF STATE   SEPTEMBER 24, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 23, 2000
	PASSED THE ASSEMBLY   AUGUST 29, 2000
	PASSED THE SENATE   AUGUST 28, 2000
	AMENDED IN SENATE   AUGUST 18, 2000
	AMENDED IN SENATE   JUNE 14, 2000
	AMENDED IN SENATE   MAY 22, 2000
	AMENDED IN ASSEMBLY   SEPTEMBER 3, 1999

INTRODUCED BY   Assembly Member Floyd
   (Coauthor:  Senator Lewis)

                        FEBRUARY 11, 2000

   An act to amend Section 6203 of the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 330, Floyd.  Sales and use taxes:  retailers and sellers:
conventions and trade shows.
   The Sales and Use Tax Law imposes a tax on the gross receipts from
the sale in this state of, or the storage, use, or other consumption
in this state of, tangible personal property.  That law imposes the
sales tax upon "retailers," as defined, and requires every person
desiring to engage in or conduct business as a "seller," as defined,
to obtain a sales tax permit.  Existing law provides that every
retailer engaged in business in this state and making sales of
tangible personal property for storage, use, or other consumption in
this state, that engages in specified activity in this state shall,
at the time of sale or at the time the storage, use, or other
consumption becomes taxable, collect the tax from the purchaser.
   Existing law provides that a retailer shall not be considered a
retailer engaged in business in this state, except as specified, if
that retailer's sole physical presence in this state is to engage in
convention and trade show activities, as specified, and if the
retailer does not engage in those convention and trade show
activities for more than 7 days, in whole or in part, in this state
during any 12-month period and did not derive more than $10,000 of
gross income from those activities in this state during the prior
calendar year.  However, the retailer is liable for tax with respect
to any sale occurring at, or pursuant to an order taken at or during,
the convention and trade show activities.
   This bill would instead provide that a retailer shall not be
considered a retailer engaged in business in this state, except as
specified, if that retailer's sole physical presence in this state is
to engage in convention and trade show activities, as specified, and
if the retailer does not engage in those convention and trade show
activities for more than 15 days, in whole or in part, in this state
during any 12-month period and did not derive more than $100,000 of
gross income from those activities in this state during the prior
calendar year.
   This bill would state the intent of the Legislature in limiting
the definition of "retailer engaged in business in this state."
   Counties and cities are authorized to impose local sales and use
taxes in conformity with state sales and use taxes.  Exemption from
state sales and use taxes enacted by the Legislature are incorporated
into the local taxes.
   Section 2230 of the Revenue and Taxation Code provides that the
state will reimburse counties and cities for revenue losses caused by
the enactment of sales and use tax exemptions.
   This bill would provide that, notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made and the state
shall not reimburse local agencies for sales and use tax revenues
lost by them pursuant to this bill.
   The bill would incorporate changes made by AB 2412, to become
operative if both bills are chaptered and this bill is chaptered
last.
  This bill would take effect immediately as a tax levy, but its
operative date would depend on its effective date.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 6203 of the Revenue and Taxation Code is
amended to read:
   6203.  (a) Except as provided by Sections 6292 and 6293, every
retailer engaged in business in this state and making sales of
tangible personal property for storage, use, or other consumption in
this state, not exempted under Chapter 3.5 (commencing with Section
6271) or Chapter 4 (commencing with Section 6351), shall, at the time
of making the sales or, if the storage, use, or other consumption of
the tangible personal property is not then taxable hereunder, at the
time the storage, use, or other consumption becomes taxable, collect
the tax from the purchaser and give to the purchaser a receipt
therefor in the manner and form prescribed by the board.
   (b) As respects leases constituting sales of tangible personal
property, the tax shall be collected from the lessee at the time
amounts are paid by the lessee under the lease.
   (c) "Retailer engaged in business in this state" as used in this
section and Section 6202 means and includes any of the following:
   (1) Any retailer maintaining, occupying, or using, permanently or
temporarily, directly or indirectly, or through a subsidiary, or
agent, by whatever name called, an office, place of distribution,
sales or sample room or place, warehouse or storage place, or other
place of business.
   (2) Any retailer having any representative, agent, salesperson,
canvasser, independent contractor, or solicitor operating in this
state under the authority of the retailer or its subsidiary for the
purpose of selling, delivering, installing, assembling, or the taking
of orders for any tangible personal property.
   (3) As respects a lease, any retailer deriving rentals from a
lease of tangible personal property situated in this state.
   (4) (A) Any retailer soliciting orders for tangible personal
property by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing, debt
collection, telecommunication, or marketing activities occurring in
this state or benefits from the location in this state of authorized
installation, servicing, or repair facilities.
   (B) This paragraph shall become operative upon the enactment of
any congressional act that authorizes states to compel the collection
of state sales and use taxes by out-of-state retailers.
   (5) Notwithstanding Section 7262, a retailer specified in
paragraph (4) above, and not specified in paragraph (1), (2), or (3)
above, is a "retailer engaged in business in this state" for the
purposes of this part and Part 1.5 (commencing with Section 7200)
only.
   (d) (1) For purposes of this section, "engaged in business in this
state" does not include the taking of orders from customers in this
state through a computer telecommunications network located in this
state which is not directly or indirectly owned by the retailer when
the orders result from the electronic display of products on that
same network.  The exclusion provided by this subdivision shall apply
only to a computer telecommunications network that consists
substantially of online communications services other than the
displaying and taking of orders for products.
   (2) This subdivision shall become inoperative upon the operative
date of provisions of a congressional act that authorize states to
compel the collection of state sales and use taxes by out-of-state
retailers.
   (e) Except as provided in this subdivision, a retailer is not a
"retailer engaged in business in this state" under paragraph (2) of
subdivision (c) if that retailer's sole physical presence in this
state is to engage in convention and trade show activities as
described in Section 513(d)(3)(A) of the Internal Revenue Code, and
if the retailer, including any of his or her representatives, agents,
salespersons, canvassers, independent contractors, or solicitors,
does not engage in those convention and trade show activities for
more than 15 days, in whole or in part, in this state during any
12-month period and did not derive more than one hundred thousand
dollars ($100,000) of net income from those activities in this state
during the prior calendar year.  Notwithstanding the preceding
sentence, a retailer engaging in convention and trade show
activities, as described in Section 513(d)(3)(A) of the Internal
Revenue Code, is a "retailer engaged in business in this state," and
is liable for collection of the applicable use tax, with respect to
any sale of tangible personal property occurring at the convention
and trade show activities and with respect to any sale of tangible
personal property made pursuant to an order taken at or during those
convention and trade show activities.
   (f) Any limitations created by this section upon the definition of
"retailer engaged in business in this state" shall only apply for
purposes of tax liability under this code.  Nothing in this section
is intended to affect or limit, in any way, civil liability or
jurisdiction under Section 410.10 of the Code of Civil Procedure.
  SEC. 1.5.  Section 6203 of the Revenue and Taxation Code is amended
to read:
   6203.  (a) Except as provided by Sections 6292 and 6293, every
retailer engaged in business in this state and making sales of
tangible personal property for storage, use, or other consumption in
this state, not exempted under Chapter 3.5 (commencing with Section
6271) or Chapter 4 (commencing with Section 6351), shall, at the time
of making the sales or, if the storage, use, or other consumption of
the tangible personal property is not then taxable hereunder, at the
time the storage, use, or other consumption becomes taxable, collect
the tax from the purchaser and give to the purchaser a receipt
therefor in the manner and form prescribed by the board.
   (b) As respects leases constituting sales of tangible personal
property, the tax shall be collected from the lessee at the time
amounts are paid by the lessee under the lease.
   (c) "Retailer engaged in business in this state" as used in this
section and Section 6202 means and includes any of the following:
   (1) Any retailer maintaining, occupying, or using, permanently or
temporarily, directly or indirectly, or through a subsidiary, or
agent, by whatever name called, an office, place of distribution,
sales or sample room or place, warehouse or storage place, or other
place of business.
   (2) Any retailer having any representative, agent, salesperson,
canvasser, independent contractor, or solicitor operating in this
state under the authority of the retailer or its subsidiary for the
purpose of selling, delivering, installing, assembling, or the taking
of orders for any tangible personal property.
   (3) As respects a lease, any retailer deriving rentals from a
lease of tangible personal property situated in this state.
   (4) (A) Any retailer soliciting orders for tangible personal
property by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing, debt
collection, telecommunication, or marketing activities occurring in
this state or benefits from the location in this state of authorized
installation, servicing, or repair facilities.
   (B) This paragraph shall become operative upon the enactment of
any congressional act that authorizes states to compel the collection
of state sales and use taxes by out-of-state retailers.
   (5) Notwithstanding Section 7262, a retailer specified in
paragraph (4) above, and not specified in paragraph (1), (2), or (3)
above, is a "retailer engaged in business in this state" for the
purposes of this part and Part 1.5 (commencing with Section 7200)
only.
   (d) (1) For purposes of this section, "engaged in business in this
state" does not include the taking of orders from customers in this
state through a computer telecommunications network located in this
state which is not directly or indirectly owned by the retailer when
the orders result from the electronic display of products on that
same network.  The exclusion provided by this subdivision shall apply
only to a computer telecommunications network that consists
substantially of online communications services other than the
displaying and taking of orders for products.
   (2) This subdivision shall become inoperative upon the operative
date of provisions of a congressional act that authorize states to
compel the collection of state sales and use taxes by out-of-state
retailers.
   (e) Except as provided in this subdivision, a retailer is not a
"retailer engaged in business in this state" under paragraph (2) of
subdivision (c) if that retailer's sole physical presence in this
state is to engage in convention and trade show activities as
described in Section 513(d)(3)(A) of the Internal Revenue Code, and
if the retailer, including any of his or her representatives, agents,
salespersons, canvassers, independent contractors, or solicitors,
does not engage in those convention and trade show activities for
more than 15 days, in whole or in part, in this state during any
12-month period and did not derive more than one hundred thousand
dollars ($100,000) of net income from those activities in this state
during the prior calendar year.  Notwithstanding the preceding
sentence, a retailer engaging in convention and trade show
activities, as described in Section 513(d)(3)(A) of the Internal
Revenue Code, is a "retailer engaged in business in this state," and
is liable for collection of the applicable use tax, with respect to
any sale of tangible personal property occurring at the convention
and trade show activities and with respect to any sale of tangible
personal property made pursuant to an order taken at or during those
convention and trade show activities.
   (f)  Any limitations created by this section upon the definition
of "retailer engaged in business in the state" shall only apply for
purposes of tax liability under this code.  Nothing in this section
is intended to affect or limit, in any way, civil liability or
jurisdiction under Section 410.10 of the Code of Civil Procedure.
   (g) (1) The processing of orders electronically, by fax,
telephone, the Internet, or other electronic ordering process, does
not relieve a retailer of responsibility for collection of the tax
from the purchaser if the retailer is engaged in business in this
state pursuant to this section.
   (2) For purposes of this section, a retailer is presumed to have
an agent within the state, as defined in paragraphs (1) and (2) of
subdivision (c), if both of the following conditions exist:
   (A) The retailer holds a substantial ownership interest, directly
or through a subsidiary, in a retailer maintaining sales locations in
California or is owned in whole or in substantial part by such a
retailer, or by a parent or subsidiary thereof.  For purposes of this
subparagraph, "substantial ownership interest" in an entity means
that degree of ownership of equity interests in an entity that is not
less than that degree of ownership specified by Section 78p of Title
15 of the United States Code, or any successor to that statute, with
respect to a person other than a director or officer.
   (B) The retailer sells the same or substantially similar line of
products as the retailer maintaining sales locations in California
under the same or substantially similar business name, or facilities
or employees of the related retailer located in this state are used
to advertise or promote sales by the retailer to California
purchasers.
  SEC. 2.  Section 1.5 of this bill incorporates amendments to
Section 6203 of the Revenue and Taxation Code proposed by both this
bill and AB 2412.  It shall only become operative if (1) both bills
are enacted and become effective on or before January 1, 2001, but
this bill becomes operative first, (2) each bill amends Section 6203
of the Revenue and Taxation Code, and (3) this bill is enacted after
AB 2412, in which case Section 6203 of the Revenue and Taxation Code,
as amended by Section 1 of this bill, shall remain operative only
until the operative date of AB 2412, at which time Section 1.5 of
this bill shall become operative.
  SEC. 3.  Notwithstanding Section 2230 of the Revenue and Taxation
Code, no appropriation is made by this act and the state shall not
reimburse any local agency for any sales and use tax revenues lost by
it under this act.
  SEC. 4.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
However, the provisions of this act shall become operative on the
first day of the first calendar quarter commencing more than 90 days
after the effective date of this act.
